Results of mbank Group Q2 2017

Transcription

1 Results of mbank Group Q Core income kept strong, solid fundamentals for further business growth Management Board of mbank S.A. Investor Presentation July 27, 2017

2 Key highlights of Q Historically high level of core income of PLN 1,017.4 M NII at PLN M (+11.7% YoY), on improved margins NFC at PLN M (+20.5% YoY), on rising customer business Solid efficiency maintained Cost/Income ratio at 44.9% Sound liquidity level Loan-to-Deposit ratio at 94.6% Capital ratios well above regulatory requirements CET 1 Ratio at 18.5%/21.9% 1 Total Capital Ratio at 21.2%/25.1% 1 Well-diversified funding base Issues of long-term debt securities Capital & Liquidity Net Profit of PLN M, +23.3% compared to Q1/17 Volumes Business development Strong total revenues exceeding PLN 1.08 B Selective volume growth Gross loans at PLN 86.2 B (+2.0% QoQ, +2.8% YoY) Customer deposits at PLN 88.2 B (-0.7% QoQ, +3.3% YoY) Focus on higher margin lending Mortgage loan sales at PLN 1.8 B in H1/17 (+22% YoY); non-mortgage loan sales at PLN 3.7 B (+20% YoY) Strengthening the position as mobile and transactional bank mbox project: a license for digital platform sold to a French partner Expanding client transactionality Accelerating client acquisition 5,547 thou. retail clients (+401 thou. YoY) and 21,500 corporate clients (+1,280 YoY) 1 Stand-alone capital ratios; 2

3 Agenda of Q2/17 in mbank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 3

4 of Q2/17 in mbank Group Key Financials: Profit and Loss Account PLN million Q2/16 Q1/17 Q2/17 change QoQ change YoY Net interest income % +11.7% Net fee and commission income % +20.5% Total income 1 1, , , % -10.2% Total costs (excl. BFG) % +3.2% Contributions to the BFG % -54.4% Loan Loss Provisions % +2.3% Operating profit % -20.0% Taxes on the Group balance sheet items % +4.5% Profit before income tax % -24.4% Net profit % -30.6% Net Interest Margin (NIM) 2.25% 2.42% 2.43% p.p p.p. NIM excl. CHF portfolio 2.60% 2.77% 2.76% p.p p.p. Cost/Income ratio 40.8% 53.4% 44.9% -8.5 p.p p.p. Cost of Risk 0.59% 0.41% 0.58% p.p p.p. Return on Equity (ROE) 12.8% 6.8% 8.2% +1.4 p.p p.p. Return on Assets (ROA) 1.23% 0.68% 0.83% p.p p.p. 1 In Q2/16 revenues include a one-off gain on the settlement of Visa transaction of PLN million; 2 In Q1/17 contribution consists of annual payment to the Resolution Fund of PLN million and quarterly payment to the Deposit Guarantee Scheme of PLN 15.4 million; 4

5 of Q2/17 in mbank Group Key Financials: PLN million Q2/16 Q1/17 Q2/17 change QoQ change YoY Total assets 128, , , % +0.5% Gross loans to customers 83,862 84,538 86, % +2.8% Retail client loans 48,272 48,338 48, % +1.0% Corporate client loans 1 33,805 34,759 36, % +6.6% Amounts due to customers 85,302 88,744 88, % +3.3% Retail client deposits 49,453 53,829 53, % +8.9% Corporate client deposits 1 33,832 32,080 31, % -6.3% Total equity 12,797 13,338 13, % +6.9% Loan to Deposit ratio 94.7% 92.1% 94.6% +2.5 p.p p.p. NPL ratio 5.8% 5.2% 5.3% +0.1 p.p p.p. Coverage ratio 58.5% 59.4% 57.2% -2.2 p.p p.p. Common Equity Tier 1 Ratio 15.6% 18.8% 18.5% -0.3 p.p p.p. Total Capital Ratio 18.3% 21.6% 21.2% -0.4 p.p p.p. 1 Excluding reverse repo / buy-sell-back transactions for loans and repo transactions for deposits; 5

6 of Q2/17 in mbank Group Business Development: Client acquisition and Market shares Number of Retail Clients (thou.) Number of Corporate Clients , , , , , , ,220 20,695 20,940 21,235 2,138 2,149 2,123 2,103 5,883 5,987 6,067 6,770 21,500 2,119 6,835 4,046 4,123 4,181 4,241 4,312 12,199 12,559 12,750 12,362 12,546 Retail Banking PL mbank CZSK Orange Finance K1 K2 K3 Market shares in Retail Banking segment Market shares in Corporate Banking segment 6.6% 6.5% 6.5% 6.5% 6.6% 6.5% 6.5% 6.5% 6.5% 9.7% 10.1% 9.8% 9.8% 10.0% 9.6% 10.1% 9.8% 9.6% 5.4% 5.4% 5.7% 5.8% 5.9% 6.0% 6.1% 6.0% 6.0% 6.4% 6.3% 6.3% 6.3% 6.3% 6.2% 6.1% 6.2% 6.3% 06/15 09/15 12/15 03/16 06/15 09/15 12/15 03/16 Loans Deposits Loans Deposits Note: Corporate clients split: K1 annual sales over PLN 500 M and non-banking financial institutions; K2 annual sales PLN 30 M to PLN 500 M; K3 annual sales below 30 M. 6

7 of Q2/17 in mbank Group Development of Retail and Corporate new business Sales of mortgage loans (PLN M, by quarter) +32% +25% Sales of non-mortgage loans (PLN M, by quarter) +9% +5% 30% 12% 8% 50% , % 10% 1% 72% 8% 25% 67% 1, ,155 1,560 1, , ,801 1, ,131 1,225 11% 24% 65% Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 mbank Hipoteczny Individuals Entrepreneurs mbank CZSK Individuals Entrepreneurs mbank CZSK Sales of corporate loans (PLN M, by quarter) 2, ,163 2, , % 2,496 1,191 2, ,134 +6% 2, ,627 K1 K2 K3 New leasing contracts (PLN M, by quarter) 1,066 1, % % 1,225 1, Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Note: Corporate clients split: K1 annual sales over PLN 500 M and non-banking financial institutions; K2 annual sales PLN 30 M to PLN 500 M; K3 annual sales below 30 M. 7

8 Agenda of Q2/17 in mbank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 8

9 Analysis of Q2/17 in mbank Group Development of Loans to Customers Gradual lending acceleration, focus on higher-margin products Development of Gross Loans and Advances to Customers 2% 83,862 1,653 84,199 1, % +4.9% +2.0% +2.3% 84,581 84,538 86,221 1,457 1,360 1,321 1% 33,937 34, % 34,174 34, % 36,143 40% 33,937 34,528 34,174 34,841 36,143 42% Loans to corporate entities 58% 48,272 48,119 48,950 48,338 48,758 57% 48,272 2,532 10,520 48,119 2,345 11, % +3.4% 48,950 2,350 11, % +1.4% 48,338 48,758 11,804 2,326 12,432 2,321 35,220 34,624 35,369 34,207 34,005 Individual clients Corporate clients +X.X% Excluding FX effect Mortgage loans: to Individuals to Microfirms Non-mortgage loans Public sector & Other receivables 9

10 Analysis of Q2/17 in mbank Group Development of Deposits Outflow of term deposits continued, growth in current accounts Development of Amounts due to Customers 1% 41% 85, ,119 85, , % +3.7% -0.7% 91, % ,744 88,156 1,364 1,584 37,383 33,551 32,737 2% 37% 35,119 1,287 33,832 33,829 2,011 31, % -6.3% 37,383 1,600 35, % -1.2% 33,551 32,737 1,471 1,035 32,080 31,702 Core corporate deposits Repo transactions +8.9% 0.0% 58% 49,453 50,735 53,495 53,829 53,835 61% 49,453 14,349 50,735 15,237 53,495 15,381 53,829 14,651 53,835 12,672 35,104 35,498 38,114 39,178 41,163 Individual clients Corporate clients +X.X% Excluding Repo transactions Current and saving accounts Term deposits Public sector 10

11 Analysis of Q2/17 in mbank Group Income of mbank Group Record high core revenues Development of mbank Group s Income -10.2% 1, , % 1, % 1, , QoQ -20.6% YoY +2.6% +1.2% +20.5% % +11.7% Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Net Interest Income Net Fee and Commission Income Dividend Income Net Trading Income Gains less Losses from Investment Securities 1 Net Other Operating Result +X.X% Excluding one-off gain on Visa 1 Including one-off gain on the settlement of Visa transaction (PLN M) in Q2/16; 11

12 Analysis of Q2/17 in mbank Group Costs of mbank Group Solid efficiency despite investing in future growth Development of mbank Group s Costs -1.1% +3.2% % +5.1% Q4/16 costs include additional payment to the BFG related to the bankruptcy of Cooperative Bank in Nadarzyn of PLN 10.9 million. Q1/17 costs include annual contribution to the Resolution Fund of PLN million. QoQ YoY % -18.6% % +16.7% % +2.3% Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 +X.X% Excluding contributions to the BFG and one-off regulatory costs Personnel Costs Material Costs Other Costs 1 Amortization Contributions to the BFG 46.5% Normalized C/I ratio of mbank Group for H1/ % 48.1% 47.1% 53.4% 44.9% C/I ratio of mbank Group (quarterly) 1 Including taxes and fees, contributions to the Social Benefits Fund; 12

13 Analysis of Q2/17 in mbank Group Loan Loss Provisions and Risk Costs Cost of risk at a normalized level Net Impairment Losses on Loans and Advances % % mbank Group s Cost of Risk by Segment (bps) Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Retail Banking Corporates and Financial Markets mbank Group s Cost of Risk: quarterly Retail Portfolio Corporate Portfolio YtD 13

14 Analysis of Q2/17 in mbank Group Loan Portfolio Quality Resilient risk indicators confirming good loan portfolio quality mbank Group s Impaired Loans Portfolio 4,846 4, % 4,537 4, % 4,568 mbank Group s NPL Ratio 5.8% 5.9% 5.4% 5.2% 5.3% mbank Group applies a conservative clientoriented approach in its methodology of NPL recognition. mbank Group s NPL Ratio by segment mbank Group s Coverage Ratio incl. IBNR provisions 63.7% 64.4% 62.1% 64.7% 62.3% 6.4% 5.6% 6.5% 5.7% 5.8% 5.2% 5.4% 5.2% 5.7% 5.2% Corporate Portfolio* Retail Portfolio * excl. Reverse repo / buy-sell-back transactions NPL Ratio of Mortgage Loan Portfolio* 58.5% 59.5% 57.1% 59.4% 57.2% 3.8% 3.8% 3.7% 3.7% 3.6% * to Private Individuals in Poland 14

15 Analysis of Q2/17 in mbank Group Funding Structure Details A well diversified funding profile and safe liquidity levels mbank Group s funding structure as of mbank s ratings Loan-to-Deposit Ratio +2.5 pp Other Subordinated liabilities EMTN Other debt securities in issue Due to banks 3% 2% 7% 4% 8% 30% 46% Retail deposits 76% Corporate deposits Long-term rating Fitch Short-term rating BBB F2 Standard & Poor s Long-term credit rating BBB+ Short-term credit rating A % 95.1% 89.4% 92.1% 94.6% Maturity of long-term funding instruments in original currencies as of (LC in million) 1, CHF Loans CHF Subloans EUR Loans EUR EMTN CHF EMTN of Issues under Euro Medium Term Note (EMTN) Programme Issue size Issue date Maturity date Tenor Coupon CHF 200 M Y 2.500% EUR 500 M Y 2.375% EUR 500 M Y 2.000% EUR 500 M Y 1.398% CHF 200 M Y 1.005% 15

16 Analysis of Q2/17 in mbank Group Key Regulatory Ratios Strong capital ratios well above regulatory requirements mbank Group s Total Capital Ratio 20.29% 18.33% 18.61% 2.97% 2.72% 2.73% 21.59% 2.83% 21.24% 2.77% 17.02% mbank s NSFR and LCR 150% 151% 199% 168% 158% 114% 114% 109% Basel III requirement 100% 116% 112% 15.61% 15.88% 17.32% 18.76% 18.47% 13.21% (PLN B) minimum requirement as of Net Stable Funding Ratio (NSFR) Liquidity Coverage Ratio (LCR) CET 1 capital ratio Tier 2 XX.X Total risk exposure amount 1 Due to the adjustment of the application of the regulatory floor to the requirements of article 500 CRR and the extensions of the AIRB approach; Note: On the Polish FSA identified mbank as an other systemically important institution and imposed on the bank an additional buffer at 0.5% of total risk exposure amount. 16

17 Agenda of Q2/17 in mbank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 17

18 Macroeconomic Update (1/2) The economy set to grow by 4% on average in 2017 and 2018 The economy maintained strong growth in Q2/17 8% 6% 4% 2% 0% -2% Q1/13 Q3/13 Q1/14 Q3/14 Q1/15 Q3/15 Q1/16 Q3/16 Q1/17 Industrial output YoY GDP YoY Construction output YoY (RA) Q2/17 growth set to be slightly lower than Q1/17 figure, but still close to 4%. Due to less favourable calendar and slower inventory accumulation, industrial output slowed down slightly. 20% 10% 0% -10% -20% -30% Source: GUS, NBP Tighter labour market across the board, supporting consumption No of job offers per unemployed Enterprises reporting staffing problems, weighted avg The biggest economic story in Poland is probably on the labour market: tight conditions, record low unemployment, accelerating wage growth. This bodes well for consumption. Source: GUS, NBP GDP forecast (% YoY) mbank s forecast Q1/14 Q3/14 Q1/15 Q3/15 Q1/16 Q3/16 Q1/17 Q3/17 Q1/18 Q3/18 Investment Net exports Consumption Inventories GDP YoY (%) The economy set to grow by ca. 4% this year and in Consumption will remain the key pillar of growth, followed by accelerating investment. Source: GUS, NBP Inflation set to move sideways, but core inflation is trending up 5% 4% 3% 2% 1% 0% -1% -2% Repo rate CPI inflation Core inflation Repo rate forecast CPI forecast Core CPI forecast Inflation set to stabilize close to 2%, as the fuels price spike ends and food price growth levels off. The uptrend in core inflation means, however, that the likelihood of higher inflation is growing. Source: GUS 18

19 Macroeconomic Update (2/2) Slight rebound in credit growth. Polish assets are in demand. Corporate loans and deposits (% YoY, FX-adjusted) 30% 20% 10% 0% -10% Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Corporate deposits Corporate loans Corporate investment loans Corporate lending began to rebound at the beginning of 2017 a likely sign of stronger investment activity. Deposit growth remains moderate. Source: NBP Household loans and deposits (% YoY, FX-adjusted) 15% 12% 9% 6% 3% 0% Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Household deposits Household loans Mortgage loans Household deposits decelerate as consumption accelerates and household are looking for alternative investments. Lending is still sluggish and mortgage production remains in line with historical average. Source: NBP Risk premium in Polish bonds continues to decline Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 10Y PL-GER spread The risk premium in Polish assets has declined recently. Strong growth, better fiscal figures and favourable climate for emerging markets all contributed to lower yields and spreads. Source: Bloomberg PLN appreciated vis-a-vis the USD and the CHF, stable against the EUR 4, , , , , , Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 EUR/PLN USD/PLN CHF/PLN PLN strengthened in lockstep with bonds and equities, then stabilized around With stronger EUR, USD/PLN and CHF/PLN are at multi-year lows. Source: Bloomberg 19

20 2017 in forecasts and the impact on mbank Group Macroeconomic environment and challenges for the banking sector Key economic indicators F GDP growth (YoY) 3.8% 2.7% 4.0% Domestic demand (YoY) 3.3% 2.4% 4.5% Private consumption (YoY) 3.0% 3.8% 4.4% Investment (YoY) 6.1% -7.9% 5.8% Inflation (eop) -0.5% 0.8% 1.5% MPC rate (eop) CHF/PLN (eop) EUR/PLN (eop) Banking sector monetary aggregates YoY F Corporate loans 8.2% 5.0% 9.4% Mortgage loans 7.0% 4.8% -0.8% Non-mortgage loans 6.2% 5.9% 7.2% Corporate deposits 10.3% 7.9% 8.5% Retail deposits 9.8% 9.7% 3.9% Outlook for mbank Net interest income & NIM Total costs Loan Loss Provisions (Slightly positive) Continued gradual increase of margin driven by changing structure of loan portfolio More limited room for reduction of funding costs Net Fee & Commission income (Slightly positive) Constantly rising client transactionality and strong acquisition in both retail and corporate segment Selective adjustment of fees for some services (Slightly negative) Business-driven costs to remain well-contained Higher contribution to the BFG under new deposit guarantee scheme Rising amortisation due to ongoing investments in IT (Neutral) Resilient asset quality supported by good macroeconomic situation and low unemployment Small downside risk due to changing loan book mix Source: mbank s estimates as of

21 Agenda of Q2/17 in mbank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 21

22 Additional Information: Selected Financial Data Page No. Detailed Results of the Page No. Consolidated Profit and Loss Account 23 Retail Banking Consolidated Statement of Financial Position 24 of Q2/17: Financial Results and Volumes mbank Group s Ratios 25 Loan Portfolio Structure in Poland 40 mbank Group s Historical Performance mbank in the Czech Republic and Slovakia Net Interest Income & Margin 29 Corporates and Financial Markets Fee and Commission Income 30 of Q2/17: Financial Results and Volumes 44 Trading and Other Income 31 Financial Markets Activity: Market Shares 45 Analysis: Assets & Liabilities 32 mbank Group s Analysis: Currency structure 33 Results of Consolidated Companies 47 Analysis: Structure of loans and deposits 34 mbank Hipoteczny (mbh) and Covered Bonds Issuance Analysis: Loan portfolio structure 35 Leasing and Factoring 50 analysis: Development of Capital Ratios 36 mbank Dom Maklerski (mdm) 51 mbank s share price performance 52 Contact Details 53 22

23 Additional Information: Selected Financial Data Consolidated Profit and Loss Account Quarterly results (PLN thou.) Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Net interest income 684, , , , ,779 Net fee and commission income 209, , , , ,612 Dividend income 2, ,970 Net trading income 59,513 74,402 26,629 76,897 61,068 incl. FX result 66,065 82,162 50,407 76,407 57,912 Gains less losses from investment securities 244,755 2,350 10,749 1,636 (18,298) Net other operating income 1 1,992 8,478 3,131 4,530 17,741 Total income 1,202,992 1,038,747 1,044,712 1,081,778 1,080,872 Total operating costs (490,699) (499,887) (491,926) (577,691) (485,090) Overhead costs (427,329) (447,196) (438,073) (526,609) (433,494) Amortisation (63,370) (52,691) (53,853) (51,082) (51,596) Loan loss provisions (117,743) (139,452) (39,679) (82,921) (120,399) Operating profit 594, , , , ,383 Taxes on the Group balance sheet items (89,011) (89,824) (92,802) (91,305) (93,018) Profit before income tax 505, , , , ,365 Net profit attributable to owners of mbank 1 Including the share in the profits (losses) of joint ventures; 388, , , , ,700 23

24 Additional Information: Selected Financial Data Consolidated Statement of Financial Position Assets (PLN thou.) Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Cash and balances with Central Bank Loans and advances to banks Trading securities Derivative financial instruments Loans and advances to customers Investment securities Intangible assets Tangible fixed assets Other assets Total assets Liabilities (PLN thou.) Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Amounts due to other banks Derivative financial instruments Amounts due to customers Debt securities in issue Subordinated liabilities Other liabilities Total liabilities Total equity Total liabilities and equity

25 Additional Information: Selected Financial Data mbank Group s Ratios Financial Ratios Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Net Interest Margin (quarterly) 2.25% 2.31% 2.35% 2.42% 2.43% Net Interest Margin YtD 2.27% 2.28% 2.30% 2.42% 2.42% Net Interest Margin YtD (excl. CHF portfolio) 2.63% 2.64% 2.65% 2.77% 2.76% Cost to Income Ratio (quarterly) 40.8% 48.1% 47.1% 53.4% 44.9% Cost to Income Ratio YtD 43.9% 45.3% 45.7% 53.4% 49.1% Cost of Risk (quarterly) 0.59% 0.69% 0.20% 0.41% 0.58% Cost of Risk YtD 0.47% 0.55% 0.46% 0.41% 0.49% ROE net (quarterly) 12.85% 7.61% 9.81% 6.81% 8.23% ROE net YtD 11.46% 10.18% 10.09% 6.81% 7.53% ROA net (quarterly) 1.23% 0.71% 0.88% 0.68% 0.83% ROA net YtD 1.11% 0.98% 0.95% 0.68% 0.75% Loan-to-Deposit Ratio 94.7% 95.1% 89.4% 92.1% 94.6% Total Capital Ratio 18.33% 18.61% 20.29% 21.59% 21.24% Common Equity Tier 1 Ratio 15.61% 15.88% 17.32% 18.76% 18.47% Equity / Assets 9.9% 10.0% 9.8% 10.2% 10.6% TREA / Assets 55.4% 54.9% 48.8% 49.5% 51.1% NPL ratio 5.8% 5.9% 5.4% 5.2% 5.3% NPL coverage ratio 58.5% 59.5% 57.1% 59.4% 57.2% NPL coverage ratio incl. general provisions 63.7% 64.4% 62.1% 64.7% 62.3% 25

26 mbank Group s historical performance (1/3) Net Interest Income & NIM 2.4% 2.2% 2.3% 2.1% 2.3% 2.3% 2.4% Net Fee and Commission Income CAGR +4% 2,280 2,226 CAGR +6% 2,491 2,511 2, % 1,361 1, % H1/16 H1/ H1/16 H1/17 Trading and Other Income CAGR +2% one-off Visa gain booked in Q2/16 Total Income CAGR +5% -66% -2% ,571 3,674 3,939 4,093 4,295 2,212 2, H1/16 H1/ H1/16 H1/17 26

27 mbank Group s historical performance (2/3) Operating Costs CAGR +4% One-off regulatory costs Contributions to the BFG +9% Pre-provision Income & C/I ratio 46.5% 45.7% 44.9% 50.1% CAGR +5% 45.7% 43.9% 49.1% 1,661 1,678 1,771 1,857 1, ,909 1,995 2,169 2,043 2,332-11% 1,240 1, H1/16 H1/ H1/16 H1/17 Loan Loss Provisions & Cost of Risk Net Profit & Return on Equity bps % 13.1% 13.1% 11.8% 10.1% 11.5% 7.5% CAGR -5% CAGR 0% % ,197 1,206 1,287 1,301 1, % H1/16 H1/ H1/16 H1/17 27

28 mbank Group s historical performance (3/3) Total Assets (PLN B) Equity & Total Capital Ratio CAGR +7% +1% 18.73% 19.38% 14.66% 17.25% CAGR +8% 20.29% 18.33% 21.24% +7% ,619 10,256 11,073 12,275 13,051 12,797 13, Total Gross Loans (PLN B) CAGR +5% % Total Deposits (PLN B) CAGR +12% % Individual clients Corporate clients Public sector and other Individual clients Corporate clients Public sector 28

29 Additional Information: Selected Financial Data Net Interest Income & Margin Interest Income Structure Interest Expense Structure , % NIM [%] 2% 3% % % 8% 30% % % % Q2/ Q3/ Q4/ Q1/ Q2/17 17% 1% 18.6 Q2/ Q3/ Q4/ Q1/ Q2/17 7% Cash and short-term deposits Loans and advances Amounts due to banks Subordinated liabilities Investment securities Derivatives classified into banking book Amounts due to customers Other Debt securities held for trading Other Issue of debt securities 29

30 Additional Information: Selected Financial Data Fee and Commission Income Fee and Commission Income Structure % 11% QoQ YoY +7.0% +21.8% -3.1% +12.0% Q2/ Q3/ Q4/ Q1/ Q2/17 18% 9% 22% 4% 1% 19% -0.1% +6.9% +8.2% +11.1% +4.9% +16.1% +4.7% +15.8% +16.0% +34.7% -3.6% +12.4% Credit related fees Portfolio management Guarantees and trade finance Payment card fees Brokerage activity & securities issue Accounts & money transfers Insurance activity Other (incl. custody) 30

31 Additional Information: Selected Financial Data Trading and Other Income Net Trading Income Structure Gains less Losses from Investment Securities +3% % Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 1 Q3/16 Q4/16 Q1/17 Q2/17 FX Result Other Trading Income 1 Excluding gain on the settlement of Visa transaction (PLN M); 31

32 Additional Information: Selected Financial Data Analysis: Assets & Liabilities Structure of Assets (PLN B) % 23% Structure of Liabilities and Equity (PLN B) % 11% 10% % 3% % % % % Amounts due from banks Derivative financial instruments Amounts due to other banks Equity Loans and advances to customers Investment securities Amounts due to customers Other Trading securities Other Debt securities in issue 32

33 Additional Information: Selected Financial Data Analysis: Currency Structure Currency Structure of Loans to Customers (net) (PLN B) Currency Structure of Amounts due to Banks and Customers 1 (PLN B) % 1% 17% % 3% 18% % % % % PLN CHF EUR USD Other (mainly CZK) PLN CHF EUR USD Other (mainly CZK) 1 Including amounts due to other banks and customers and subordinated liabilities; 33

34 Additional Information: Selected Financial Data Analysis: Structure of Loans and Deposits Structure of mbank Group s Gross Loans as of Structure of mbank Group s Deposits as of Non-mortgage retail loans PLN 12.5 B Mortgage loans to Microfirms PLN 2.3 B Public sector loans and other PLN 1.3 B Mortgage LC loans to Individuals 1 PLN 14.0 B 15% 3% 57% 1% 16% Total: PLN 86.2 B 42% 23% Corporate loans PLN 36.1 B Mortgage FX loans to Individuals PLN 20.0 B Individual clients: term deposits PLN 12.7 B 61% Individual clients: current accounts PLN 41.2 B Public sector clients PLN 1.6 B 14% 2% Total: PLN 88.2 B 47% 30% 7% Corporate clients: current accounts 2 PLN 26.6 B Corporate clients: term deposits PLN 6.1 B 1 Including local currency mortgage loans granted in Poland, the Czech Republic and Slovakia; 2 Including repo transactions, loans and advances received, other liabilities; 34

35 Additional Information: Selected Financial Data Analysis: Loan Portfolio Structure mbank Group s Sector Exposure by Industry as of Households 1.3% 1.2% 1.4% 1.4% 1.6% 1.6% 1.6% 2.1% 2.2% 2.5% 2.6% 4.5% 7.0% 12.4% Total: PLN 86.2 B 56.5% Real estate management Building industry Transport and logistics Food sector Metals Motorization Chemicals and plastics Wood, furniture and stationery Construction materials Leasing and rental of movables Scientific and technical activities Wholesale trade Fuels Other (below 1.15%) A well diversified loan portfolio with granular structure 35

36 Additional Information: Selected Financial Data Analysis: Detailed Development of Capital Ratios mbank Group s Common Equity Tier 1 (CET 1) Ratio % % 17.32% % Q4/16 PREVIOUS Adjustment of the method Q4/16 CURRENT Change in business FX impact on TREA Net profit retention Other Q1/17 Change in business FX impact on TREA Net profit retention Other Q2/17 mbank Group s Total Capital Ratio % % 20.29% % Q4/16 PREVIOUS Adjustment of the method Q4/16 CURRENT Change in business FX impact on TREA Net profit retention Other 1 Q1/17 Change in business FX impact on TREA Net profit retention Other Q2/17 1 Due to lower percentage of perpetual subordinated debt, which may be included in Tier 2 capital (50% in 2017); 36

37 Detailed Results of the in Q2/17 Retail Banking 37

38 Retail Banking of Q2/17: Financial and Business Results Profit before Tax of the Segment (PLN M, by quarter) Q2/ Q3/16 +29% excluding one-off gain Q4/ Q1/17-8% Retail Banking PL mbank CZSK Gain on Visa transaction Q2/17 Number of Retail Service Locations mbank (former MultiBank) Advisory centres mfinanse 1 Light branches mkiosks (incl. Partner Kiosks) mbank CZSK Number of non-cash transactions with payment cards (M, by quarter) Value of non-cash transactions with payment cards (PLN M, by quarter) +24% +14% +21% +13% ,480 6,794 7,283 6,907 7,814 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 1 Including financial centres and agency service points; 38

39 Retail Banking of Q2/17: Loans and Deposits Gross Loans to Retail Banking Clients 1 Deposits from Retail Banking Clients +1.0% +0.9% +8.9% 0.0% 22% 5% 8% 48,272 10,520 2,532 3,690 48,119 11,150 2,345 3,577 48,950 11,231 2,350 3,687 48,338 11,804 2,326 3,484 48,758 12,432 2,321 3,576 26% 5% 7% 29% 49, ,349 50, ,237 53, ,381 53, ,651 53, ,672 24% 47% 22,658 21,775 22,126 20,774 19,990 41% 38% 18,610 18,648 19,653 20,119 21,011 39% 18% 8,872 9,272 9,557 9,949 10,439 21% 33% 16,440 16,785 18,398 18,993 20,073 37% PLN mortgage loans to Individuals Mortgage loans to Microfirms Current accounts Term deposits FX mortgage loans to Individuals granted in PL Non-mortgage loans Saving accounts Other Mortgage loans granted in CZSK 1 Currency and geographical breakdown based on management information; 39

40 Retail Banking Loan Portfolio Structure of mbank Group in Poland Market Shares in Household Loans in Poland 7.7% 7.6% 7.7% 7.6% 7.6% 7.5% 4.8% 4.8% 4.7% 4.8% 4.9% 5.0% 7.5% 5.0% 7.4% 5.1% 7.3% 5.2% Product Structure of Retail Banking Loan Portfolio in Poland as of % 6.9% 3.9% 9.2% Mortgage loans Cash loans Credit lines Credit cards 06/15 09/15 12/15 03/ % Other Mortgage loans Non-mortgage loans mbank s Gross CHF Loan Portfolio to Retail Clients (CHF M) CAGR -6% Currency Structure of Retail Banking Loan Portfolio in Poland as of FX PLN 7,213 6,852 6,501 6,129 5,749 5,365-7% -4% 4,994 4,652 4, % 51.3% 34.6% 65.4% Total Retail Portfolio Mortgage Loan Portfolio 40

41 Retail Banking mbank in the Czech Republic and Slovakia Gross Loans and Share in Total mbank s retail volume 0% +5% 8.8% 4,269 4,199 4,291 4,091 4,290 1, Deposits and Share in Total mbank s retail volume +16% +7% 15.8% 8,507 7,940 7,950 7,328 7,291 2,305 2,347 2,455 2,078 2,039 3,270 3,238 3,319 3,182 3,403 SK CZ 5,250 5,252 5,635 5,603 6,052 SK CZ Number of clients (thou.) Total revenues % +11% SK CZ 29.3 Q2/ Q3/ Q4/ Q1/ Q2/17 SK CZ Note: Volumes based on management information. 41

42 Retail Banking mbank in the Czech Republic and Slovakia Czech Republic Clients: thou. Mortgage Loans (CZK M) +2% +2% 16,795 16,884 17,163 Non-mortgage Loans (CZK M) 2, % 3, % 3,698 Customer deposits (CZK M) +17% +5% 35,911 37,533 32,066 2 light branches, 9 financial centres & 14 mkiosks Slovakia Clients: thou. Mortgage Loans (EUR M) % % Non-mortgage Loans (EUR M) % % 38.0 Customer deposits (EUR M) % % light branches, 3 financial centres & 5 mkiosks Note: Volumes based on management information. 42

43 Detailed Results of the in Q2/17 Corporates & Financial Markets 43

44 Corporates and Financial Markets of Q2/17: Financial and Business Results Profit before Tax of the Segment (PLN M, by quarter) Q2/ Q3/16 +41% Q4/16 Corporate and Investment Banking +49% Q1/17 Q2/17 Financial Markets Number of Corporate Service Locations mbank s branches, incl. 6 advisory centres mbank s offices mleasing mfaktoring mbank Hipoteczny Zachodnio- Pomorskie 2 2 Lubuskie 2 1 Dolnośląskie Pomorskie Wielkopolskie Kujawsko- Pomorskie Łódzkie 3 1 Opolskie Śląskie 1 2 Warmińsko- Mazurskie 4 3 Mazowieckie 1 Świętokrzyskie Małopolskie 1 1 Podlaskie Lubelskie Podkarpackie Loans to enterprises 1 1,060 1,045 +6% % 925 Deposits of enterprises 1-3% -2% 20,070 20,364 19,950 20,753 21,393 25,639 24,663 28,446 25,399 24,881 loans classified as securities 1 Corporate loan and deposit volumes (for mbank only) according to current NBP rules; 44

45 Corporates and Financial Markets Market Shares mbank s Market Shares in Investment Banking Services 1 mbank in the Market for Non-Treasury Debt 2 as of , % 16.6% 41,742 Treasury Bills and Bonds IRS/FRA 15,607 1,461 Short-term Debt 8,012 Corporate Debt 13,563 Mid-term bank Debt 17.9% #3 #4 #1 9.4% 11.5% 32.5% FX Spot & Forward Market mbank 1 mbank calculations based on NBP data as of ; 2 Based on Fitch Polska S.A., Rating & Rynek (excluding BGK road bonds); 45

46 Detailed Results of mbank Group s companies in H1/17 46

47 mbank Group s Development of Profit before Tax of Consolidated Companies PLN thou. Q2/16 Q2/17 Change YoY H1/16 H1/17 Change YoY mbank Hipoteczny 1,569 5, % 13,388 16, % mleasing 20,768 17, % 41,230 33, % mfaktoring 4,952 3, % 11,162 5, % mfinanse (p. Aspiro) 41,886 34, % 78,256 72, % mlocum 4,331 21, % 15,076 22, % Dom Maklerski mbanku N/A 2, N/A mwealth Management 1 3, N/A 8, N/A Other 2 3,036-2,043 + / - 1,277-3,285 + / - Total 79,619 79, % 172, , % 1 Companies were integrated into the organizational structure of mbank as of ; 2 Other subsidiaries include mfinance France, mcentrum Operacji, BDH Development, Garbary, Tele-Tech Investment and Future Tech FIZ (since Q2/17); 47

48 mbank Group s mbank Hipoteczny (mbh) established in 1999 specialised mortgage bank and the largest issuer of covered bonds in the Polish market Public sector loans and other receivables Housing loans to individual customers (incl. new sales and pooling transactions) Commercial loans Issuance of Covered Bonds (PLN M, by year) Private placement of EUR 70 million and PLN 400 million , , , issue in EUR Profit before Income Tax % Q2 Q1 Gross loans and advances to customers +21% 9,516 8,498 9, ,474 4,001 4,411 9, ,862 +6% 10, ,419 Outstanding amount of Covered Bonds issued (PLN M, nominal value) 4, , % 5,268 5,279-2% 5,182 4,870 5,030 4,965 4,731 4,720 4,446 Public covered bonds Mortgage covered bonds 48

49 mbank Group s mbank Hipoteczny (mbh): Issuance Activity on the Covered Bonds Market of Mortgage Covered Bonds issued in (public issues) Amount Currency Issue date Maturity date Tenor (years) Coupon 7.5 M EUR EURIBOR 6M + 80bps 8.0 M EUR Fixed (3.50%) 15.0 M EUR Fixed (3.50%) 20.0 M EUR Fixed (3.20%) M PLN WIBOR 6M + 93bps M PLN WIBOR 6M + 93bps 20.0 M EUR Fixed (1.115%) 50.0 M EUR EURIBOR 3M + 87bps M PLN WIBOR 6M + 78bps 20.0 M EUR Fixed (1.135%) M PLN WIBOR 6M + 87bps 11.0 M EUR Fixed (1.285%) 50.0 M EUR EURIBOR 3M + 69bps M PLN WIBOR 3M + 110bps M PLN WIBOR 3M + 115bps M PLN WIBOR 3M + 120bps 50.0 M EUR EURIBOR 3M + 87bps 50.0 M PLN Fixed (2.91%) M PLN Fixed (2.91%) 13.0 M EUR Fixed (1.18%) 35.0 M EUR Fixed (1.183%) 24.9 M EUR Fixed (0.94%) 49

50 mbank Group s Leasing and Factoring Leasing contracts Market share & position Q (data for H not available) Profit before Tax +13% 7.5% -18% established in 1991 provides financial and operating leasing of cars, trucks, machinery and real estate 2,076 1,066 1, ,354 1,225 1, Rank #3 Source: Polish Leasing Association (PLA) Q2 Q1 Factoring contracts Market share & position H Profit before Tax established in 1995 offers factoring services, incl. domestic and export recourse and non-recourse factoring and import guarantees 5,451 2,820 2, % 6,044 3,122 2, % Rank #8 Source: Polish Factors Association (PFA) % Q2 Q1 50

51 mbank Group s Brokerage Services mbank Dom Maklerski (mdm) mdm Equities Trading on WSE and Market Share in Turnover (PLN M, by quarter) 6.0% 5.1% 5.2% 4.1% 4.4% 9,056 7,211 6,021 5,074 3,682 mdm Futures Trading on WSE and Market Share in Turnover (thou. of contracts, by quarter) 12.5% % % % % Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 mdm Bonds Trading on WSE and Market Share in Turnover (PLN M, by quarter) 5.2% % % % % 53.4 mdm Options Trading on WSE and Market Share in Turnover (thou. of contracts, by quarter) 12.5% 10.1% 9.1% 9.0% 8.5% Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Source: mbank calculations based on WSE data. 51

52 mbank s share price performance in H1/17 mbank s shares have gained this year despite regulatory and legislative risks mbank s index membership and weights* mbank s share performance v. main indices (rebased to 100) WIG % WIG % WIG 1.845% mbank s share price in MIN ( ) MAX ( ) % WIG-Banks 6.897% 130 WIG-Poland 1.892% 125 * Share in index as of Listed on the Warsaw Stock Exchange since October % +15.9% The only share belonging to WIG-20 blue chip index since its inception in April 1994 A strategic shareholder, Germany s Commerzbank, owns 69.4% of shares ISIN PLBRE Bloomberg MBK PW Number of shares issued mbank WIG-Banks Index WIG-20 Index Source: WSE, Bloomberg (data as of ). 52

53 Contact details mbank s Investor Relations at your service: address: investor.relations@mbank.pl Ernest Pytlarczyk Head of Analysis and Investor Relations, Chief Economist Joanna Filipkowska Deputy Head of Investor Relations Direct dial: ernest.pytlarczyk@mbank.pl Direct dial: joanna.filipkowska@mbank.pl Paweł Lipiński Direct dial: pawel.lipinski@mbank.pl Marta Polańska Direct dial: marta.polanska@mbank.pl Monika Zaręba Direct dial: monika.zareba@mbank.pl Investor Relations website: mbank Analyzer: analyzer.mbank.pl mbank S.A. Analysis and Investor Relations Department ul. Senatorska Warszawa 53